NOVOSENSE released its annual performance report on the evening of April 25. The company's performance changed face after listing.
NOVOSENSE is an early investment company invested by Huawei Hubble, which will land on the Science and Technology Innovation Board in 2022 and will be in the limelight for a while after accepting Huawei Hubble's shares. As the saying goes, when the tide recedes, you know who is swimming naked, and the listing of NOVOSENSE was abandoned by online investors for 778 million yuan, accounting for 38.76% of the total number of online offerings, which created a record for the largest abandonment amount and abandonment ratio in the history of A-shares.
Net profit fell 221.85% year-on-year
The operating income in 2023 will be about 1.311 billion yuan, a year-on-year decrease of 21.52%. It is worth noting that NOVOSENSE's sales volume in 2023 will increase by 34% year-on-year. The increase in sales volume was mainly due to the steady growth in overall demand in the automotive electronics segment.
In 2023, the shipment volume of NOVOSENSE in the field of automotive electronics will reach 164 million, and the revenue in the field of automotive electronics will account for 30.95%, an increase of about 7.82% over the previous year. In 2023, the company has also achieved market breakthroughs in the fields of body electronics, automotive smart lighting, and thermal management of new energy vehicles.
However, affected by the overall macro economy and intensified market competition, the selling price of NOVOSENSE products was under pressure, and the gross profit margin declined, but the company's sales volume increased year-on-year, and operating income decreased year-on-year.
The net profit after deducting non-recurring gains and losses was -393 million yuan, a year-on-year decrease of 332.08%. NOVOSENSE's operating income has declined sharply, and its profitability is weak. The net profit loss was about 305 million yuan, a year-on-year decrease of 221.85%.
Figure: 2023 NOVOSENSE annual report
The reason for the decline in net profit
The main reasons for the decline in NOVOSENSE's net profit in 2023 are:
1. Affected by the overall macro economy and intensified market competition, the selling price of NOVOSENSE products is under pressure, and the gross profit margin has declined.
2. In 2023, the industrial market and the photovoltaic and energy storage markets are still in the stage of destocking and gradual recovery.
3. NOVOSENSE pays attention to the accumulation of talents and technologies in the downward cycle of the industry, and continues to invest resources in R&D investment, market development, supply chain system, quality management, talent construction and other aspects, so that the company's sales expenses, management expenses and R&D expenses continue to rise.
4. The implementation of the restricted stock incentive plan after the listing of NOVOSENSE Micro will amortize the share-based payment expenses of 221 million yuan in 2023, and if the impact of share-based payment expenses is excluded, the company's net profit attributable to the owners of the parent company in 2023 will be -84.2603 million yuan, and the net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses will be -172 million yuan.
Gross profit margin was 38.5%, down 11.5% year-on-year
In 2023, the main application market of global analog chips is the communication field, with a market share of 36%, covering a wide range of communication terminals and network equipment from smartphones to base stations. As another important application area, automotive electronics occupies 24% of the market share, mainly involving chips for vehicle control, entertainment systems and driver assistance technology. The industrial sector accounts for 21% of the market share, covering many aspects such as industrial automation and industrial instruments. In contrast, the consumer electronics and personal computer market share is relatively small, with the two combined at about 18%.
The main competitors of NOVOSENSE are countries with early establishment, large revenue scale and high brand influence
Leading companies such as Melexis, Renesas, Infineon, Analog Devices and Texas Instruments. There is still a certain gap between NOVOSENSE and the above-mentioned companies in terms of revenue scale, product richness and technology accumulation.
At present, the market for signal chain chips and power management chips is huge, and the competition in the domestic industry is also extremely fierce, with a large number of listed companies such as SRP, Shengbang and Shanghai Belling emerging.
Figure: 2023 NOVOSENSE annual report
In 2023, the sales revenue of various chip products of NOVOSENSE will change significantly, and the revenue of sensor products will be 166 million yuan, a year-on-year increase of 49.18%, mainly due to the smooth progress of the introduction of new magnetic sensor products into the client. Gross profit margin fell by 3.41%, a relatively small decline.
Signal chain products will achieve revenue of 705 million yuan in 2023, a year-on-year decrease of 32.55%. The gross profit margin fell by 12.41%, which was an important reason for the decline in the comprehensive gross profit margin of NOVOSENSE.
Power management products will achieve revenue of 428 million yuan in 2023, a year-on-year decrease of 16.08%. Gross margin decreased by 13.38%.
The gross profit margin of signal chain products, power management products, overseas business and direct sales business decreased significantly, mainly due to the impact of changes in supply and demand in the downward cycle of the industry. Affected by the overall macro economy and intensified market competition, the selling price of NOVOSENSE products was under pressure, and the gross profit margin was 38.5%, down 11.5% year-on-year, a large decline.
In 2023, the domestic and overseas operating income decreased by 23.80% and 4.51% respectively, and the direct sales revenue in 2023 increased by 21.77% year-on-year, and the distribution revenue decreased by 30.24% year-on-year.
The average salary of R&D personnel increased by 4.16% year-on-year
As a high-tech enterprise, the R&D expenses of NOVOSENSE in 2023 will be 521 million yuan, an increase of 29.17% over the same period of last year, and the R&D expenses after excluding share-based payment expenses will be 349 million yuan, an increase of 46.50% over the same period of last year. R&D investment accounted for 39.79% of operating income, an increase of 15.62% year-on-year, mainly due to the increase in the number of R&D personnel of the company, as of the end of December 2023, the number of R&D personnel of NOVOSENSE increased by 98 year-on-year, an increase of 30.06%.
Figure: 2023 NOVOSENSE annual report
NOVOSENSE pays attention to the accumulation of talents and technologies in the downward cycle of the industry, and continues to invest resources in R&D investment and talent construction, the number of R&D personnel and the average salary of the company have increased, and the amount of share-based payment expenses included in R&D expenses has also increased significantly.
In 2023, the average salary of NOVOSENSE R&D personnel will be 610,700 yuan/person, a year-on-year increase of 4.16%.
The amount of inventory has risen sharply
Affected by factors such as weak downstream terminal demand and declining consumer confidence, the semiconductor industry will enter a period of adjustment in 2023, with the inventory level of the analog chip industry increasing and product sales prices under pressure. In 2023, the inventory amount will be 828 million yuan, accounting for 11.57% of the total assets, and there will be a large-scale increase in both the inventory amount and the proportion of total assets in 2023.
Figure: 2023 NOVOSENSE annual report
Inventories are mainly divided into raw materials, work-in-progress, and goods in stock. Raw materials account for 38% of the inventory, and in the face of revenue expansion, it is a correct and wise choice for the Shanghai silicon industry to actively stock up, which can alleviate the negative impact of rising raw material prices in the future to a certain extent.
In 2023, the production volume of NOVOSENSE products far exceeds the sales volume, resulting in a large amount of inventory.
Figure: 2023 NOVOSENSE annual report
The sales volume of NOVOSENSE sensor products and signal chain products in 2023 increased by 18.41% and 42.36% respectively compared with the previous year, and the sales volume of power management products decreased by 3.68% compared with the previous year. The increase in sales of signal chain products is mainly due to the obvious improvement in the market prosperity in the field of consumer electronics, and a variety of sensor signal conditioning chips will be launched in 2023 for use in the field of consumer electronics.
As a high-tech enterprise, commodity inventory is not a good news, some semiconductor products are updated quickly, downstream customers' requirements for commodity parameters may be updated with the change of application demand, if the future downstream customer demand, market competition pattern changes, if NOVOSENSE can not effectively expand sales channels, optimize inventory management, or untimely sales of finished products may lead to price losses, and then adversely affect the company's operating performance.
The cash flow in 2023 is -22883%, resulting in problems such as the company's weak ability to repay debts. Insufficient cash flow, of which the large inventory is difficult to liquidate is an important reason.